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WHAT  WILL  EFFECTIVELY 
RESTORE  BUSINESS? 

By 

^  / 

E  B.  LEIGH 


“What  will  effectively  restore  business  ?”  is  the  most  urgent  of 
pending  questions.  The  answer  given  by  Mr.  Leigh  in  this  address 
s  is  condensed  in  a  letter  to  Secretary  Hoover  which  in  delivery  was  read 
at  the  end,  but  which  is  here  brought  forward.  Mr.  Leigh  declares 
j‘  that  now  as  always  large  railway  purchases  are  essential  to  business 

•  recovery  and  that  railway  buying  depends  upon  gross  railway  earnings 

•  from  larger  traffic  moving  under  lower  rates  and  upon  net  railway 
\  income  preserved  through  lower  labor  cost.  His  proposals  are  in 
|  harmony  with  those  of  the  National  Industrial  Traffic  League  and 
i:  should  summon  business  men  everywhere  to  active  work  for  the  result 
j  which  we  all  desire. 

Ai,ba  B.  Johnson,  President 

{'  Frank  W.  Noxon,  Secretary 

;  Railway  Business  Association 
'  Liberty  Building,  Philadelphia 
I  Sept.  29,  1921 


f 45990 


s. 


VALUE.  OF  RAILWAY  PLANT  COMPARED  WITH  THAT  OF 
AGRICULTURE!  manufacturing  industry. 


Mr.  Leigh’s  Letter  to  Mr.  Hoover 


Chicago,  Sept.  27,  1921. 

Hon.  Herbert  Hoover,  Secretary  of  Commerce, 

Chairman  Unemployment  Conference, 

Commerce  Building, 

Washington,  D.  C. 


My  dear  Mr.  Secretary: 

RESTORATION  of  national  prosperity  can  be  started  on  its  way  by 
just  one  factor — purchasing  power.  All  substitutes  are  bootstraps  or 
phantoms. 

Among  the  sources  of  purchasing  power  the  largest  and  most  definitely 
available  is  the  power  of  the  railroads  to  buy  material  and  labor  for  main- 


2 


tenance,  additions  and  betterments.  In  normal  years  the  railways  directly 
and  indirectly  have  consumed  from  40  to  50%  of  the  iron  and  steel  production, 
admittedly  the  “barometer  of  business.” 

It  is  the  history  of  depressions  that  recovery  is  always  accompanied  by 
resumption  of  large  railroad  buying,  and  never  comes  without  it,  the  only 
exception  being  the  war  period.  The  business  so  initiated  flushes  the  channels 
of  all  industry  and  trade,  including  agriculture,  and  favorably  affects  every 
inhabitant  of  every  community. 


Net  Income  Insufficient  and  Uncertain 

AT  PRESENT  the  railroads  lack  the  money  and  the  credit  to  finance  proper 
maintenance,  not  to  say  additions  and  improvements.  Their  net  income  is 
neither  sufficient  nor  certain.  It  is  insufficient  because  railway  labor  cost  is 
too  high.  It  will  be  insufficient  until  labor  cost  comes  down  through  wage  cuts 
and  through  modifications  of  working  conditions.  It  is  uncertain  because 
special  groups  of  shippers  are  exerting  pressure  upon  the  roads  and  upon  the 
Interstate  Commerce  Commission  for  privileged  concessions,  most  of  which 
where  granted  have  resulted  in  little  or  no  freight  movement,  which  are  unfair 
to  other  shippers  who  adhere  to  prewar  procedure  in  the  discussion  of  rate 
revision  and  which,  if  made  general  without  wage  reduction,  would  dissipate 
all  hope  of  net  income  either  adequate  or  stable,  and  postpone  indefinitely  that 
entrance  into  the  market  by  the  railroads  without  which  no  business  recovery 
can  be  genuine  or  permanent. 

In  my  judgment  the  Unemployment  Conference  could  devise  no  remedy  for 
current  depression  more  effective  than  this: 


What  Shippers  Can  Do 

PERSUADE  every  shipper  who  favors  lower  freight  rates — 

1.  To  participate  in  an  organized  effort  to  convince  the  Federal 
Railroad  Labor  Board  that  railway  labor  cost  must  be  immediately 
and  substantially  reduced. 

2.  To  refrain  from  enlistment  of  executive  and  legislative  officers 
of  the  government  for  exertion  of  pressure  upon  the  railroads  or  upon 
the  Commission  in  connection  with  rates ;  and  to  employ  exclusively 
in  the  discussion  of  proposed  rate  revisions  negotiation  with  the 
carriers  or,  failing  agreement  with  them,  orderly  procedure  by  testi¬ 
mony  and  argument  before  the  Interstate  Commerce  Commission. 

Rates  and  Wages  Most  Important 

PURPOSELY  the  so-called  railroad  refunding  bill  is  not  bracketed  with  the 
factors  next  above  specified.  The  reason  for  so  treating  it  is  that  its  great 
importance  would  be  in  direct  relief  to  the  railway  supply  industry,  and  in 
what  I  shall  say  I  am  discussing  not  the  special  needs  of  that  industry  but  the 
needs  of  the  whole  nation.  Somewhere  near  $500,000,000  may  be  made  avail- 


3 


able  for  settlement  of  balances  due  the  railroads  by  the  government  on  current 
account  if  the  sums  due  the  government  by  the  railroads  on  capital  account  can 
be  funded.  Somewhere  between  $200,000,000  and  $300,000,000  may  be  due 
supply  concerns  from  the  railroads — remittances  awaiting  settlement  of  govern¬ 
ment  balances.  Therefore  probably  not  much  in  excess  of  $300,000,000 
would  remain  for  new  orders  which  at  best  would  be  temporary  and  not  large 
compared  with  amounts  permanently  involved  in  the  rate  and  wage  problem. 
Not  even  the  whole  of  this  sum  will  be  paid  over  immediately.  Settlements 
are  the  result  of  negotiation,  and  take  time.  The  Director  General  has  pre¬ 
dicted  that  the  last  will  be  completed  by  the  end  of  1922. 

Speaking  for  the  railway  supply  industry,  in  which  my  company  does  a  part 
of  its  business,  I  desire  to  thank  business  men  generally  for  the  zeal  and  energy 
with  which  they  have  aided  us  in  promoting  passage  of  the  refunding  bill. 
Enactment  will  help  us  very  much  and  the  relief  will  be  reflected  beyond  our 
craft.  But  this  is  a  transitory  phase  and  its  importance,  both  immediate  and 
in  the  long  run,  is  greatly  exceeded  by  that  of  the  rate  and  wage  questions. 

Recovery  Awaits  Railroad  Buying 

ALTHOUGH  the  company  with  which  I  am  connected  has  had  for  some 
years  not  to  exceed  30%  to  40%  of  its  business  with  the  railways,  I  have  made 
for  many  years  systematic  observation  of  the  relation  between  railway  buying 
and  general  business  prosperity.  I  have  attached  as  an  appendix  to  this  letter 
the  prolongation  of  a  chart  which  shows  that  currently,  as  heretofore,  general 
business  resumption  waits  upon  railroad  purchases. 

In  discussing  that  topic  I  have  exchanged  ideas  with  many  persons.  Among 
those  who  have  given  it  sustained  thought  there  seem  to  be  two  classes.  The 
first  class  are  persuaded  that  in  the  upward  climb  from  a  depression  the  first 
stage  is  resumption  of  merchandise  movement  in  such  commodities  as  textiles, 
boots  and  shoes  and  other  necessaries  of  the  individual  consumer,  and  that  the 
consequent  improvement  in  railroad  earnings  is  reflected  in  railroad  purchases 
which  broaden  and  accelerate  commercial  and  industrial  resurrection.  The 
other  class,  to  which  I  belong,  hold  that  as  a  matter  of  history  it  is  railroad 
buying  which  itself  initiates  the  whole  movement,  and  that  any  recovery  in 
general  business  before  the  roads  come  into  the  market  is  negligible.  There  is 
no  present  occasion  for  arguing  which  of  the  two  classes  is  correct  on  the 
point  where  they  differ,  because  the  important  point  is  that  on  which  they  agree ; 
namely,  that  however  it  starts,  a  resumption  of  general  business  is  strengthened 
and  hastened  by  railroad  buying  and  cannot  be  permanent  without  it. 

Why  Risk  Protracted  Doldrums? 

APPLYING  this  doctrine  to  the  present  juncture,  it  is  unnecessary  for  all 
concerned  to  harmonize  exactly  their  views  as  to  the  stage  of  recovery,  if  any, 
which  business  has  reached.  The  conclusion  arrived  at  by  each  individual 
would  depend  upon  the  value  assigned  by  him  to  various  conflicting  factors.  We 
ought  to  be  unanimous  in  this — that  if  merchandise  buying  is  now  on  the 
upward  trend  large  railroad  buying  will  help  mightily  to  give  it  permanence, 


4 


where  otherwise  it  might  fluctuate  fitfully  for  many  months ;  and  that  if  those 
who  think  the  tide  has  turned  are  unduly  optimistic,  large  railroad  buying  will 
confirm  their  hope.  Why  run  the  risk  of  protracted  doldrums  and  probably 
serious  set-backs  by  neglecting  so  obvious  an  expedient? 

Practical  Measure  for  the  Conference 

THE  NOVEL  ASPECT  in  the  present  situation  is  this — that  whereas  during 
about  20  years  past  recoveries  have  found  the  railways  able  to  come  into  the 
market  with  some  vigor,  though  steadily  less  in  each  recurring  instance,  the 
f  present  occasion  finds  them  almost  utterly  without  the  means  to  resume  pur¬ 
chasing.  Never  in  the  history  of  our  railways  has  their  physical  condition  been 
at  a  lower  ebb,  or  their  need  of  rehabilitation  greater. 

It  is  respectfully  suggested  that  the  Unemployment  Conference  picture 
1  railroad  buying  and  the  requisites  for  its  resumption  to  the  public  in  such  colors 
as  will  evoke  an  irresistible  movement  for  railroad  wage  reductions  and,  that 
accomplished,  and  railway  operating  cost  brought  down,  for  reconsideration 
of  railway  rates  by  the  Interstate  Commerce  Commission  in  orderly  procedure 
as  befits  a  quasi- judicial  arm  of  the  government  charged  by  Congress  with  the 
responsibility  of  sanctioning  tariffs  under  which  the  traffic  can  move  and  the 
railroads  can  grow. 

With  high  respect, 

Very  truly  yours, 

E.  B.  Leigh. 


i 


5 


value:  of  railway  ROAD  **o  e  q  u  i  p  m  ent (all roads) 
COMPARED  WITH  THE  CAPITAL  OF  ALL  MANUFACTURING  INDUSTRIES 


6 


WHAT  WILL  EFFECTIVELY 
RESTORE  BUSINESS? 

By  E.  B.  LEIGH 


President  Chicago  Railway  Equipment  Co.,  before  the  National  Conference 
of  State  Manufacturers  Associations,  Chicago,  Sept.  29,  1921 


WHAT  will  effectively  restore 
business  ? 

There  are  conclusive  grounds  for 
believing  that  the  largest  single  factor 
in  the  present  business  depression  is 
the  enforced  and  continued  curtail¬ 
ment  of  railway  purchases.  No  factor 
which  could  $ow  be  introduced  into 
the  situation  would  do  more  to  stimu¬ 
late  general  business  out  of  this  de¬ 
pression  than  a  vigorous  resumption 
of  railway  buying.  This  conclusion, 
while  applying  with  peculiar  force  to 
the  state  of  affairs  at  this  moment,  is 
l  based  upon  a  careful  study  and  com¬ 
parison  covering  a  period  of  many 
years,  showing  the  intimate  relation 
between  railway  purchases  and  gen- 
'  eral  business. 

Comparatively  few  realize  what  a 
great  factor  the  railways  are  in  the 
buying  field.  Having  this  in  mind, 
sometime  ago  it  occurred  to  me  to 
try  to  present  this  in  some  graphic 
form  which  would  more  quickly  por¬ 
tray  this  fact,  to  give  a  sort  of  “back¬ 
ground,”  as  it  were,  for  the  more 
ready  appreciation  of  this  situation. 

I  have  gathered  some  statistics, 


which  will  serve  to  more  fully  illus¬ 
trate  what  I  wish  to  bring  to  your 
attention. 

SOME  STATISTICS 

FROM  FIGURES  taken  from  the 
United  States  Bureau  of  Census  re¬ 
port  for  1914  (the  latest  available) 
comparisons  have  been  laid  out  on 
Charts  numbered  1  to  5.  It  is  to  be 
regretted  that  the  Census  figures  for 
1920  are  not  yet  obtainable.  These 
illustrations  while  not  given  as  being 
entirely  proof  against  critical  analysis 
will  serve  to  show  “relation”  in  at 
least  a  general  way. 

Chart  No.  1  shows  shaded  the 
then  value  of  the  Railways  of  the 
United  States  Road  and  Equipment: 

$16,148,532,502  and 

In  white  the  capital  of  all  Manu¬ 
facturing  Industries  of  the  United 
States,  $22,790,890,000. 

The  relation  of  railway  property, 
and  that  of  capital  invested  in  manu¬ 
facture  is  thus  clearly  reflected. 

Chart  No.  2  is  an  enlargement  of 
Chart  No.  1,  showing  in  detail  the 


7 


relation  and  extent  of  the  13  leading 
manufacturing  industries ;  all  the  other 
manufacturing  industries  (embracing 
over  75  distinct  groups)  are  shown  in 
one  section. 

Chart  No.  3  shows  (1)  shaded,  the 
then  value  of  railway  cars  and  loco¬ 
motives  only,  at  $4,137,318,000 
and 

(2)  In  white,  the  value  of  manu¬ 
facturing  machinery  implements  and 
tools  (all  manufacturing  industries) 
at  $6,091,451,274 

SIZE  OF  THE  RAILWAY  INDUSTRY 

THUS  YOU  WILL  SEE  that  the 
then  value  of  railways*  road  and 
equipment  was  about  70%  as  great  as 
that  of  the  capital  of  all  manufactur¬ 
ing  industries,  or,  a  ratio  of  about 
41%  for  railways  and  59%  for  capital 
of  manufacturing  industries  taken  to¬ 
gether. 


The  value  of  railway  cars  and  loco¬ 
motives  alone  represented  an  amount 
about  70%  as  great  as  that  of  the 
value  of  machinery,  implements  and 
tools  in  all  manufacturing  industries, 
or,  again  taken  together,  a  ratio  of 
about  40%  for  the  railways  and  60% 
for  manufacturing  machinery,  etc. 

Chart  No.  4  is  a  comparison  of  the 
then  value  of  railway  cars  and  loco-  ’v 
motives  with  that  of  farm  machinery, 
implements  and  tools: 

( 1 )  Shaded,  cars  and  locomotives  at 

$4,137,318,000; 

and 

(2)  In  white,  farm  machinery, 
tools  and  implements  at 

$1,368,224,548; 
or  a  value  of  cars  and  locomotives 
three  times  as  great  as  that  of  all  the 
farm  machinery,  tools  and  imple¬ 
ments  at  that  time. 

Chart  No.  5  is  a  combination  of 


8 


Charts  3  and  4  showing  for  compari¬ 
son: 

(1)  Shaded,  cars  and  locomotives, 

$4,137,318,000; 

(2)  In  white,  larger  segment,  man¬ 

ufacturing  equipment,  machinery  and 
tools,  $6,091,451,274,  and 

(3)  In  white,  smaller  segment, 
farm  machinery,  implements  and  tools, 

$1,368,224,548. 

With  these  facts  before  you,  to¬ 
gether  with  the  large  chart  headed 
*  “Railway  Purchases,”  I  shall  endeavor 
to  make  clear  the  doctrine  to  be  pre¬ 
sented. 

OBSERVATIONS  OF  A  QUARTER 
CENTURY 

FOR  MORE  than  25  years  past  I 
have  observed  the  effect  of  railway 
purchases  upon  general  business  pros¬ 
perity — induced  by  the  fact  that  in  my 
business  (  a  portion  of  which  is  that 


of  railway  supplies)  I  had  noted  that 
when  the  railways  of  the  country 
entered  the  field  of  substantial  capital 
purchases,  there  invariably  followed  a 
period  of  general  business  prosperity ; 
and,  likewise,  the  cessation  of  such 
purchases  was  invariably  followed  by 
a  decline  in  general  business. 

More  and  more  impressed  with  this, 
in  the  year  1913,  and  with  data  then 
carefully  collected  from  the  year  1904 
to  that  time,  I  set  to  work  to  test  out 
this  principle. 

RAMIFICATIONS 

INASMUCH  as  the  railways  of  this 
country  constitute  its  greatest  in¬ 
dustry  next  to  that  of  agriculture; 
with  but  one  thing  to  sell — transpor¬ 
tation  ;  the  ultimate  consumers  of 
everything  they  buy ;  their  purchases 
extending  substantially  throughout 
almost  every  department  of  business; 
many  of  them  on  a  tremendous  scale ; 
it  must  be  obvious  how  potent  a  factor 
they  are  in  general  business  condi¬ 
tions. 

As  the  iron  and  steel  industry  has 
long  been  recognized  as  being  the 
truest  index  of  general  business  con¬ 
ditions,  and  as  prior  to  1914  it  was 
reliably  estimated  that  the  railways 
consumed,  directly  and  indirectly,  be¬ 
tween  40%  and  50%  of  the  iron  and 
steel  production  of  the  country,  it  is 
manifest  that  the  expansion  or  re¬ 
striction  of  railway  consumption  must 
vitally  affect  this  barometer. 

FREIGHT  CARS  ORDERED  THE  INDEX 

THE  RAMIFICATIONS  of  railway 
purchases  make  it  impossible  to  clas¬ 
sify  them  in  the  aggregate.  But  many 
years  of  observation  led  to  the  belief 
that  no  item  so  clearly  and  typically 
reflected  the  railways’  general  purchas¬ 
ing  ability  as  that  of  new  equipment, 
and  no  other  tabulation  has  been  as 


9 


regularly  and  accurately  kept,  hence 
adopted  as  being  the  truest  index  of 
general  railway  buying;  for  when  the 
roads  are  buying  freely  of  new  equip¬ 
ment,  they  are  likewise  buying  freely 
of  all  other  articles  essential  to  main¬ 
tenance,  operation  and  betterment. 

Accordingly,  the  number  of  freight 
cars  ordered  each  year  taken  as  a  unit 
and  termed  “railway  purchases,”  has 
been  projected  on  the  well  known 
chart  of  the  Brookmire  Economic 
Service  for  the  period  of  1901  to  date, 
as  shown  on  the  chart  now  offered. 
This  could  be  carried  back  to  many 
years  earlier  had  we  the  business 
index  for  those  years. 

SIGNIFICANT  PARALLEL 

WHILE  the  “general  business”  line 
is,  of  necessity,  a  deduction  from  the 
elements  used,  nevertheless  these  de¬ 
ductions  have  been  made  on  the  same 
mathematical  basis,  hence  for  pur¬ 
pose  of  affording  a  comparison  this 
line  is  mathematically  correct. 

The  “railway  purchases”  line  repre¬ 
sents  the  actual  number  of  cars 
ordered  during  the  periods  noted  and 
officially  confirmed. 

The  general  business  line  is  shown 
in  monthly  periods,  while  the  railway 
purchases  line  is  given  in  six-month 
periods. 

Thus,  on  this  chart  “railway  pur¬ 
chases”  and  “general  business”  are 
shown:  their  relation  traced  over  a 
period  of  twenty  successive  years. 
This  chart,  based  upon  indisputable 
facts,  clearly  demonstrates  a  proposi¬ 
tion  which  the  speaker  has  taken  occa¬ 
sion  to  set  forth  in  the  following 
phrase : 

“  RAILWAY  PURCHASES 
MEASURE  GENERAL  BUSINESS 
PROSPERITY.” 


HISTORY  REPEATS 

THE  PERIOD  preceding  1907  was 
one  of  increasing  net  income  for  the 
railways.  Their  revenue  keeping 
pace  with  expenses,  it  was  the  custom 
of  railway  managers  generally  to  dis¬ 
count  future  requirements  in  order¬ 
ing  equipment,  and  they  felt  they 
could  with  prudence  count  upon  re¬ 
sources  warranting  these  large  opera¬ 
tions.  The  chart  shows  that  car 
orders  reached  a  maximum  in  1905 
and  1906. 

But  in  1908  a  new  condition  or 
factor  appeared,  due  to  the  invest¬ 
ment  of  the  rate-making  power  in  the 
hands  of  the  Interstate  Commerce 
Commission — the  beginning  of  a  regu¬ 
lation  which  had  in  it  no  element  of 
responsibility  for  transportation  de¬ 
velopment.  The  act  of  1920  has 
greatly  bettered  this  condition. 

Thus,  for  the  first  time  were  “rail¬ 
way  purchases”  controlled  by  abnor¬ 
mal  rather  than  normal  conditions ; 
and  have  so  continued,  more  or  less, 
from  1908  to  the  present  time.  I  shall 
not  take  the  time  to  trace  each  year, 
only  referring  to  some  years  which 
indicate  exceptional  conditions. 

WAR  BUYING 

IT  WAS  STATED  in  1913  that  it 
was  believed  railway  purchases  were 
and  would  continue  to  be  the  controll¬ 
ing  factor  in  general  business  until 
or  unless  some  other  great  purchasing 
power  developed  or  came  to  take  their 
place. 

Then  the  unexpected  happened ;  the 
great  European  war  broke  out,  result¬ 
ing  in  war  buying  supplanting  railway 
buying.  It  was  not  until  well  within 
1915  that  the  effect  of  foreign,  muni¬ 
tion  and  war  work  orders  was  sub¬ 
stantially  felt  by  us;  but  the  chart 
shows  a  gradual  yet  steady  climb  of 
the  business  line  during  the  first 


10 


six  months,  somewhat  accelerated 
throughout  the  last  half  of  the  year, 
and  not  measurably  accounted  for  by 
railway  purchases. 

EXCEPTIONAL  PERIOD 

IN  1916  we  find  the  phenomenon  of 
steadily  advancing  general  business 
with  declining  railway  purchases  dur¬ 
ing  the  first  six  months,  although  rail¬ 
way  purchases  were  greatly  augmented 
~  during  the  last  half  of  that  year, 
aided  by  the  foreign  cars  bought  in 
this  country. 

«  In  August,  1918,  Brookmire  read¬ 
justed  his  barometer  index  owing  to 
the  government  control  of  prices  of  a 
number  of  basic  or  fundamental  com¬ 
modities,  and  carried  this  readjust¬ 
ment  back  "to  the  year  1914.  This  I 
have  shown  in  the  open  spaced  lines. 

During  the  period  of  active  war 
operations  many  industries  classified 
as  non-essential,  and  certain  products 
of  others  were  greatly  restricted;  so 
that  we  entered  the  year  1919  with 
a  great  shortage  of  many  classes  of 
goods. 

With  the  removal  of  the  war  restric¬ 
tions  coupled  with  the  high  wages 
earned,  and  augmented  by  the  pre¬ 
ceding  period  of  unexampled  pros¬ 
perity,  many  industries  sprang  into 
great  activity — among  them  were 
J  jewelry  and  silverware,  musical  in¬ 
struments,  rubber,  tobacco  and  especi¬ 
ally  automobiles;  and  last  but  not 
j  least,  our  enormous  exports. 

All  these  conditions  combined  to 
maintain  a  level  of  general  business 
which  ordinarily  would  not  have  ob¬ 
tained.  Beginning  in  the  latter  part  of 
1920  the  tide  turned,  and  since  then 
we  have  been  headed  toward  normal 
conditions. 

NORMALCY  EXPECTED  BACK 

IT  IS  CONFIDENTLY  believed 
that  railway  buying  will  again  resume 


its  normal  relation  to  general  business. 
Even  the  upheaval  of  the  world  war 
failed  to  obscure  the  principle  of  the 
doctrine;  while  on  the  other  hand  its 
manifest  presence  in  that  situation 
seems  only  to  emphasize  further  its 
soundness. 

Had  I  the  time  I  might  trace  for 
you,  in  graphic  form,  the  flow  of  this 
controlling  current.  Issuing  forth  from 
the  railways,  it  proceeds  first  to  the 
great  car-building  plants ;  thence  on 
to  the  iron  and  steel  plants  and  to  the 
very  large  number  of  railway  supply 
industries.  By  the  latter  it  is  again 
directed  toward  the  iron  and  steel  and 
other  industries — thence  in  turn  influ¬ 
encing  a  highly  increased  number  of 
other  and  contributory  industries, 
until  this  influence  has  reached  or 
set  in  motion  the  entire  industrial 
machinery — while  at  every  turn  and 
in  every  direction  it  has  furnished 
employment  to  labor.  Prosperity  and 
employment  are  synonymous  terms, 
as,  conversely,  are  stagnation  and 
unemployment. 

Thus,  labor  as  a  matter  of  fact  is 
more  directly  and  vitally  concerned  in 
this  great  problem  than  any  other 
single  element. 

There  is  one  industry  which  has 
made  such  gigantic  strides  and 
assumed  such  vast  proportions,  par¬ 
ticularly  in  the  past  four  or  five  years, 
that  I  will  briefly  refer  to  it.  The 
automobile  industry  and  its  relation  to 
the  Iron  and  Steel  Industry  may  be 
interesting : 

RAILROAD  AND  AUTOMOBILE 
BUYING 

A  BUSINESS  writer  of  country¬ 
wide  reputation  recently  quoted  a  pig 
iron  manufacturer  as  having  said: 

“There  is  a  false  notion  that  the 

railroads  are  our  biggest  customers. 

In  the  greatest  year  of  railroad  pur- 


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chasing  the  total  was  3,000,000  tons 
out  of  a  total  of  36,000,000  tons. 
The  automobile  business  plays  a 
larger  part  in  our  industry  than 
does  the  railroad.” 

Let  us  examine  the  record. 

The  greatest  year  of  automobile 
production ,  not  sales,  was  1920,  when 
there  were  produced  1,883,158  pas¬ 
senger  auto  cars  and  332,039  auto 
trucks,  or  a  total  of  2,205,197. 

The  amount  of  iron  used  in  the 
average  passenger  automobile,  accord¬ 
ing  to  Government  survey  during  the 
war,  is  630  lbs. 

A  single  railroad  car  wheel  (8  to  a 
car)  weighs  700  lbs.  The  average 
production  is  3,000,000  wheels  per 
year;  with  a  maximum  production  of 
approximately  6,000,000  wheels. 

The  amount  of  steel  exclusive  of 
springs  and  alloy  steel  weighs  750  lbs. 

A  single  car  axle  (5x9  smallest 
size),  smooth  forged,  weighs  750  lbs. 
The  average  production  of  steel 


rails  is  2,500,000  tons  per  year;  the 
maximum  3,636,031  tons. 

Without  attempting  to  mention  the 
“thousand  and  one”  other  articles 
going  into  railroad  construction  and 
use,  the  facts  just  cited  will  suffice  to 
at  least  challenge  this  pig  iron  manu¬ 
facturer’s  statement,  as  quoted. 

The  1919  figures  show  1,657,652 
passenger  automobile  cars  and  316,364 
auto  trucks  produced.  These  con¬ 
sumed  4%  of  the  total  iron  and  steel 
production  of  that  year. 

IT  IS  OBVIOUS  that  adequate  rail¬ 
way  revenues  are  essential  to  adequate 
railway  purchases ;  that  adequate  rail¬ 
way  purchases  are  fundamentally 
essential  to  general  business  pros¬ 
perity  ;  that  general  business  pros¬ 
perity  means  the  prosperity  and  well¬ 
being  of  the  entire  nation. 

[In  conclusion,  Mr.  Leigh  read  his 
letter  to  Secretary  Hoover,  which 
forms  the  introduction  to  this  pamph¬ 
let] 


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REQUESTS  FOR  COPIES  of  this 
leaflet  will  be  welcome  from  all  those 
desiring  to  place  it  in  the  hands  of 
their  representatives  or  friends.  Copies 
furnished  or  sent  direct  to  lists  upon 
application  to  Frank  W.  Noxon, 
Secretary  Railway  Business  Associa¬ 
tion,  600  Liberty  Building,  Philadel¬ 
phia. 


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